Westpac expands loan distribution to private credit investors
Westpac is preparing to increase the amount of mortgage and business lending it distributes to outside investors, as the bank looks to use private credit funds, superannuation funds and other asset managers to support additional lending capacity.
The strategy would extend Westpac’s existing practice of securitising and selling home loans into other areas of the bank. Chief executive Anthony Miller has brought in former Goldman Sachs partner Rob Taylor to oversee the initiative, working alongside institutional banking head Nell Hutton.
The approach comes as global credit investors continue to seek exposure to Australian lending. The report cited Blackstone’s acquisition of HSBC’s $36 billion mortgage book and the $15.4 billion portfolio from Westpac’s former RAMS subsidiary taken on by KKR and PIMCO.
Westpac looks to broaden loan distribution
Taylor’s role will include developing new securitisation structures, considering secondary loan sales and expanding what Westpac describes as “funded loan distribution” — effectively transferring part of the risk attached to loans originated by the bank to external investors.
Hutton said the bank could reach limits on credit appetite or concentration even when clients still required more financing. Bringing in investors willing to assume part of that credit exposure could give Westpac additional capacity to lend.
Westpac’s institutional loan book exceeds $125 billion and grew 23 per cent in the latest half-year period. The portfolio spans areas including data centres, renewable energy projects, defence and healthcare.
The bank already has a long history of mortgage securitisation through residential mortgage-backed securities. The proposed strategy would broaden the use of risk distribution across other lending activities.
Miller said Taylor would help the bank improve debt products, capital efficiency and returns from client relationships.
Global investors seek Australian credit exposure
UBS analyst John Storey said there appeared to be strong interest among global alternative asset managers in Australian credit risk. He also said the ability to originate and distribute risk could improve balance-sheet efficiency, drawing parallels with practices used by banks in the United States and Europe.
The report noted that major Wall Street banks have increasingly used debt distribution strategies. It cited the sale last year of debt originally provided to finance Elon Musk’s acquisition of Twitter, now X, as an example of loans being subsequently sold to investors.
Australian banks are largely funded by customer deposits and hold substantial books of mostly variable-rate mortgages, according to the report. Hutton said Westpac’s objective was to distribute more risk to domestic and global asset managers that remained interested in transactions despite market volatility.
National Australia Bank is also pursuing closer relationships with global credit investors. The report said NAB is launching an initiative to access institutional asset managers as part of its $30 billion plan to finance new housing supply.
MST Marquee analyst Brian Johnson said Westpac’s strategy could be positively received if it reduced risk while improving returns, while cautioning against arrangements driven purely by regulatory capital considerations.
The expansion of private credit relationships is occurring alongside closer regulatory scrutiny of the sector following the collapse of Sydney property developer Bathla, which failed owing more than $3.3 billion, almost entirely to non-bank lenders. The corporate regulator is also monitoring how assets and loans are valued by service providers.
For property investors, the development highlights a broader shift in how major banks may fund and distribute credit exposure, potentially allowing lenders to originate loans while sharing portions of the associated risk with institutional investors.
SOURCE ATTRIBUTION:
Based on reporting by James Eyers in The Australian Financial Review, published 7 September 2026. Source: www.afr.com
